With the election about two weeks away, we thought it would be a good time to review the California propositions.  Below are summaries of some of the propositions, as well as arguments for and against; for the full details, click here: http://voterguide.sos.ca.gov/pdf/.

Proposition 30: Temporary Taxes to Fund Education.  Guaranteed Local Public Safety Funding.  Initiative Constitutional Amendment

Summary:

• Increases personal income tax on annual earnings over $250,000 for seven years.
• Increases sales and use tax by ¼ cent for four years.
• Allocates temporary tax revenues 89% to K–12 schools and 11% to community colleges.
• Bars use of funds for administrative costs, but provides local school governing boards discretion to decide, in open meetings and subject to annual audit, how funds are to be spent.
• Guarantees funding for public safety services realigned from state to local governments.

Analysis:

• Opponents claim that Prop. 30 “allows the politicians to play a ‘shell game’” wherein they may redirect money currently allocated for schools and use it for other purposes, such that these new taxes under Prop. 30 would serve only to replace that money.  Opponents cite a Wall Street Journal Editorial from April 22, 2012 that articulates the same theory.  “California Governor Jerry Brown is trying to sell his tax hike to voters this November by saying it will go to schools. The dirty little secret is that the new revenues are needed to backfill the insolvent teacher’s pension fund.”
• Proponents have responded that the educational revenue created under Prop. 30 will enter a special account that the “legislature can’t touch,” that the money is to be audited annually, and that Prop. 30 “authorizes criminal prosecution for misuse of money.”

Proposition 31: State Budget.  State and Local Government.  Initiative Constitutional Amendment and Statute.

Summary:

• Establishes two-year state budget cycle.
• Prohibits Legislature from creating expenditures of more than $25 million unless offsetting revenues or spending cuts are identified.
• Permits Governor to cut budget unilaterally during declared fiscal emergencies if Legislature fails to act.
• Requires performance reviews of all state programs.
• Requires performance goals in state and local budgets.
• Requires publication of bills at least three days prior to legislative vote.
• Allows local governments to alter how laws governing state-funded programs apply to them, unless Legislature or state agency vetoes change within 60 days.

Analysis:

• Proponents believe that Prop. 31 will increase public input and transparency, increase local control and flexibility, and require legislators to find long-term financial solutions.
• Opponents believe that Prop. 31 is poorly written and will in fact “increase costs, increase bureaucratic control, and undermine public protections.”  They further contend that Prop. 31 will “make it almost impossible to cut taxes or increase funding for education.”

Proposition 32: Political Contributions by Payroll Deduction.  Contributions to Candidates.  Initiative Statute.

Summary:

• Prohibits unions from using payroll-deducted funds for political purposes. Applies same use prohibition to payroll deductions, if any, by corporations or government contractors.
• Permits voluntary employee contributions to employer-sponsored committee or union if authorized yearly, in writing.
• Prohibits unions and corporations from contributing directly or indirectly to candidates and candidate-controlled committees.
• Other political expenditures remain unrestricted, including corporate expenditures from available resources not limited by payroll deduction prohibition.
• Prohibits government contractor contributions to elected officers or officer-controlled committees.

Analysis:

• Opponents focus on the exemptions in the law: specifically, that groups such as real estate developers, insurances companies, and billionaire venture capitalists are exempt from at least some parts of Prop. 32, leaving unions unable to counter such efforts.  They further assert that many of Prop. 32’s supporters are “big money donors” who will benefit from the exemptions.
• Proponents contend that in reality, many opponents are “big money special interests” who want to control Sacramento.  They claim that the Proposition goes as far as it may legally go in light of the Supreme Court’s Citizens United decision, but that ultimately it will prevent corporations and unions from financing politicians (including contractors who want to coerce politicians into approving their contracts).

Proposition 33: Auto Insurance Companies.  Prices based on Driver’s History of Insurance Coverage.  Initiative Statute.

 Summary:

• Changes current law to allow insurance companies to set prices based on whether the driver previously carried auto insurance with any insurance company.
• Allows insurance companies to give proportional discounts to drivers with some history of prior insurance coverage.
• Will allow insurance companies to increase cost of insurance to drivers who have not maintained continuous coverage.
• Treats drivers with lapse as continuously covered if lapse is due to military service or loss of employment, or if lapse is less than 90 days.

Analysis

• Proponents maintain that Prop. 33 corrects a discrepancy in current law that allows for an insurance discount when a driver stays with a single insurance provider for a period of time but not when the driver has continuous coverage throughout that time period through different insurers (thus penalizing drivers for shopping around).
• Opponents, however, insist that Prop. 33 is a “trick” that benefits insurance companies by actually raising rates.  Prop. 33 would “raise rates on drivers with perfect driving records” and “punish[] people who stopped driving for legitimate reasons—like going to college, recovering from a serious injury or taking public transportation—when they return to the insurance market.”

Additional propositions are on the ballot – keep checking our blog for updates! [REG]